QS Research · Michael Burry's Scion Capital analyst template · 2006
Seagate Technology Holdings plc (STX)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: SHORT
Conviction medium · base case -74% · downside -83% · upside 0%
The market is capitalizing a pricing-driven peak as if it were a run-rate: TTM EBIT is $5.46B (N12) against a six-year FY2021-FY2026 average operating income of $1.59B and normalized EBITDA of $1.95B (S2), and FY2026 operating income of $4.09B is more than double the prior FY2022 peak of $1.96B (S24), so the TTM figures are cycle-peak, not normal. At $455.86 (N1) the $104.65B market cap (N9) pays roughly 54x normalized EBITDA (S2, N24), while the given TTM multiples of 18.4x EV/EBITDA and 23.8x P/E (N26, N28) look reasonable only because the denominator is a peak. Built on the same normalized base as section 13 — $1.95B EBITDA at the 14.8x eight-peer median (S1), less $1.45B net debt (N20, N21, N22) on 229.56M shares (N5) — base value is $119/share, −74%; even granting today's peak $5.74B TTM EBITDA (N13) at today's own 18.4x (N26) gives ~$454, i.e. no upside, so the price already buys peak earnings forever at a peak multiple. The counter is real and explains my medium rather than high conviction: the balance sheet is nearly debt-free at 0.2x net leverage (S62), free cash flow of $4.16B TTM (N17) is genuine operating cash, and HAMR-led supply discipline with value-based pricing (S98) could keep peak margins alive longer than a six-year average that contains a historic trough implies — but that optionality is already paid for.
Key numbers
- Share price: $455.86
- Market cap: $104.65B
- Latest financial period: TTM to Oct 2, 2026
- Revenue (TTM): $13.80B
- EV / EBITDA (TTM): 18.4x
- P/E (TTM): 23.8x
- Price / book: 30.31x
The 15 boxes
- ✓ 1. Long-form business notes
Seagate sells mass-capacity HDDs (up to 44TB) and storage systems (up to 3.5PB), overwhelmingly into Data Center customers (hyperscale CSPs, OEMs, distributors, enterprises), with Edge IoT (1TB-32TB) as the smaller, seasonally first-half-weighted channel. This is a hard cycle: revenue went $11.66B in FY2022 to $7.38B in FY2023 (-37%, operating loss of $342.0M, net loss of $529.0M), then to $12.20B revenue and $4.09B operating income in FY2026. FY2026 operating income alone exceeds the whole FY2021-FY2025 run together, so TTM-era earnings are peak-like, not normal; six-year average operating income over FY2021-FY2026 is roughly $1.6B. Cash flow tracks the cycle too: operating cash flow $942.0M (FY2023) and $918.0M (FY2024) versus $3.67B (FY2026), against capex of only $569.0M in FY2026.
- ✓ 2. Competitive advantage
The advantage is an oligopoly plus a manufacturing/technology lead, not pricing power: Seagate names only Western Digital and Toshiba as HDD rivals (plus NAND flash as a substitute) and states outright that pricing for comparable products is set by industry capacity and demand. Cycle math from FY2022-FY2026 shows $8.05B of operating income on $46.89B of revenue (a 17.2% cycle operating margin), but that average conceals a swing from -4.6% in FY2023 to 33.5% in FY2026 - returns are cyclical, not a durable price umbrella. What does persist is cost and technology: HAMR/Mozaic areal-density roadmap, in-house heads and media, 3,036 U.S. patents at July 3, 2026, and capex of just $1.79B against $8.27B of operating cash flow over FY2022-FY2026.
- ✓ 3. 10-Q takeaways
The September 2026 quarter (13 weeks ended 2026-10-02) was a record-margin quarter on pricing, not volume: revenue $4,233 million, gross margin 57.3%, operating income $2,064 million (48% of revenue) and net income $1,761 million. Revenue rose $604 million (+17%) from the June 2026 quarter and $1.6 billion from the September 2025 quarter, both attributed primarily to pricing actions; exabytes were roughly flat sequentially at 220 EB (198 nearline). Cash generation was strong ($1.7 billion operating cash flow) but cash fell $446 million to $1,258 million after $1.3 billion of debt retirement, $400 million of buybacks and $168 million of dividends. The 10-Q gives no numeric forward guidance; it flags tariff/geopolitical uncertainty and customer-concentration and purchase-commitment risks.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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